Sept. 15 (Bloomberg) -- Fannie Mae and Freddie Mac's regulator is blocking as much as $24 million in ``golden parachute'' severance payments to the companies ousted chief executive officers.

The Federal Housing Finance Agency notified former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron that they will not receive the exit pay called for in their employment contracts now that the companies are under federal control, the regulator said in a statement yesterday on its Web site.

FHFA Director James Lockhart on Sept. 12 proposed limiting payments for departing executives, board members, contractors, outside lobbyists and business partners. U.S. senators including Charles Schumer of New York, Jack Reed of Rhode Island and Richard Durbin of Illinois, had urged FHFA to trim or eliminate bonuses for Mudd and Syron, citing their ``failed leadership.''

``We find it way out of line that these two executives will be rewarded with millions of dollars in bonus compensation at a time when taxpayer dollars may have to be deployed to cover any financial losses caused by errors in management,'' Schumer and Reed, both Democrats, wrote in a Sept. 9 letter to Lockhart.

Syron, 64, could have received $12 million to $14 million in exit pay, while Mudd, 50, could have gotten $7 million to $9 million, David Schmidt, a senior consultant for New York-based compensation firm James F. Reda & Associates, said last week after reviewing employment agreements in company filings.

Legal Fees

Lockhart and Treasury Secretary Henry Paulson placed Fannie and Freddie into conservatorship Sept. 7 after federal examiners found that the companies' capital was too thin and of low quality. Lockhart and Paulson tapped Herbert Allison, 65, former CEO of TIAA-CREF, to lead Washington-based Fannie, and David Moffett, 56, a Carlyle Group executive and former vice chairman of U.S. Bancorp, to lead McLean, Virginia-based Freddie.

Under the rule FHFA proposed last week, executives and directors would also need the agency's approval to have their legal costs covered by a corporate liability protection plan that is typically offered to directors and officers, according to the proposed regulation.

The proposal will be open for public comment for 45 days after it is published in the Federal Register. The rule will also apply to the 12 regional Federal Home Loan Banks.

To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net.

Last Updated: September 15, 2008 12:57 EDT